Global trade is facing a tough time as the director general of the World Trade Organization (WTO), Dr Ngozi Okonjo-Iweala, acknowledges the increasing protectionism and undermining of WTO rules. This comes as the EU and the US impose tariffs on Chinese electric vehicles (EVs), accusing unfair subsidizing by the Chinese government. President Biden has also increased import taxes on various Chinese products, while pouring money into green technology to reduce reliance on Chinese imports. The fragmented state of global trade data shows a growing trend of trade between like-minded blocks rather than across blocks, which could cost the world up to 7% of global output in the long run. The EU’s move to impose tariffs on Chinese-made EVs follows a surge in exports to Europe, raising concerns about an imbalanced trade relationship. With the Panama and Suez Canals facing disruptions due to various factors, shipping costs are on the rise, potentially leading to increased retail prices and inflation. Despite the challenges, Dr Okonjo-Iweala remains hopeful in the resilience of global trade, emphasizing the need for WTO rules to adapt to address climate change challenges. She warns against a repeat of history with retaliatory tariffs leading to a downward spiral for trade relations. It is essential to watch how countries navigate these challenges and work towards fair and sustainable trade practices to avoid global economic downturns.
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